Ramesh Thadani vs Mohit Garera
2013 Latest Caselaw 4121 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                    Reserved on : 22.08.2013
                                    Pronounced on: 12.09.2013.
+      IA No. 16413/2012 in CS(OS) 668/2010

       RAMESH THADANI                                      ..... Plaintiff
                      Through             Mr.Rohit Sharma, Advocate
               versus
       MOHIT GARERA                                        ..... Defendant
                      Through             Mr.Anil Sharma and Ms.Usha Singh,
                                          Advocates
       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.

IA No. 16413/2012 (Order 37 Rule 3(5) CPC)

1. This is an application under Order 37 Rule 3(5) CPC for grant of leave to defend filed by the defendant.

2. The plaintiff has filed the accompanying suit stating that the plaintiff had a family relationship with the defendant and on the basis of the said relationship, a friendly loan was given to the defendant. It is stated that a total sum of Rs. 32,25,000/- was advanced on different dates to the defendant. It is stated that the defendant acknowledged receiving the said loan and his liability and agreed to pay it back along with accrued interest at the rate of 1.25% per month. The defendant has issued 11 promissory notes details of which are as follows:-

"Promissory notes dated 27.09.2002 for Rs. 7,00,000/-; dated 05.10.2002 for Rs.1,25,000/-; dated 19.10.2012 for Rs.3,00,000/-; dated 23.10.2002 for Rs. 3,00,000/-; dated 12.12.2002 for Rs.2,00,000/-; dated 18.12.2002 for Rs.

3,00,000/-; dated 08.04.2003 for Rs.4,00,000/-; dated 06.10.2003 for Rs.2,00,000/-; dated 16.10.2003 for Rs.1,00,000/-; dated 20.01.2004 for RS. 2,00,000/-; dated 15.03.2004 for Rs.4,00,000/-."

3. It is further stated that in order to discharge his liability the defendant has been making part payments and the last part payment that was made by the defendant was for the sum of Rs. 45,000/- on 22.09.2009 vide cheque. It is stated that on 28.02.2010, an amount of Rs. 49,27,817/- is found due and payable by the defendant to the plaintiff. It is also stated that the defendant is liable to pay interest at the rate of 1.25 % per month on the said amount.

4. The defendant, on the other hand, in the affidavit in support of his application has stated that the aforenoted promissory notes relied upon by the plaintiff are falsely stated to be signed by the defendant and the same are fabricated. It is further stated that the defendant was born on 25.05.1983 and at the young age of 18 is stated to have put signatures on the alleged aforenoted documents. It is further stated that the defendant and family were running a business in the name and style of M/s. J.M. Industries and the plaintiff showcasing himself to be a financer/broker entered into some business transaction in the said year. It is stated that whatever transactions were held in the alleged period between the plaintiff and the family business concern of the defendant were duly paid back by the defendant and the family concern J.M. Industries. It is stated that the pay back was done through cheques and statement of accounts is stated to have been placed on record. The defendant has already paid the entire amount as per the statement of accounts of the defendant. It is further stated that the claim of

the plaintiff is barred by limitation. It is further stated that the plaintiff is a professional money lender and in view of the Punjab Registration of Money Lenders Act, the present suit is barred.

5. Learned counsel for the plaintiff has argued his case and submitted that the defendant has made mere vague denial of transactions in question. He submits that the 11 original promissory notes are on record and that in view of the vague denial about the receipt of the money, the plaintiff is entitled to a decree and the present application is liable to the rejected.

6. Learned counsel appearing for the defendant, on the other hand, submits that the claim of the plaintiff here is barred by limitation. He submits that a perusal of para 3 of the plaint would show that the loan amount stated to have been given to the defendant was in the period 2002- 2004. The last promissory note is dated 15.03.2004. He further submits that it is the plaintiff only who states that a partial amount was repaid on 22.09.2009. He submits that the debt in 2009 was barred by law of limitation as a period of three years had lapsed w.e.f. 15.03.2004. Payment as stated to have been made in 2009 will not revive a time barred debt. He further denies that any cheques were received or signatures were made on the promissory notes. He submits that these transactions pertain to some different business transactions. He also stressed that the transaction is alleged to have taken place when the defendant was only 18 years old. He also states that the suit is barred under the Punjab Registration of Money Lenders Act. He also states that the plaintiff has failed to file his IT returns. He submits that as per the IT returns of the plaintiff, he was not possessed of sufficient funds to

go through the present transaction.

7. I have heard learned counsel for the parties.

8. In the context of grant of leave to defend, the principles of law applicable are well known. The basic judgment in this regard, namely, M/s Mechalec Engineers & Manufacturers v. M/s Basic Equipment Corporation AIR 1977 SC 577, may be looked into for the said purpose. In para 8, the Hon'ble Supreme Court has held as follows:

"In Smt. Kiranmoyee Dassi and Anr. v. Dr. J.

Chatterjee 49 C.W.N. 246 , Das. J.,after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 17 C.P.C. in the form of the following propositions (at p. 253) :

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.

(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.

(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court

may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence."

In the light of the above, I may now consider the submissions of the defendant.

9. The denial of the defendant regarding execution of the promissory notes is utterly vague and does not inspire confidence. In the affidavit accompanying the present application, the defendant states that the promissory notes were not filled in by the defendant nor signed by the defendant. He further submits that the promissory notes are fabricated. On the other hand, it is stated that the family of the defendant was running business in the name and style of J.M. Industries and it is stated that whatever transactions were held in the said period between the plaintiff and the family business concern of the defendant were duly paid back by the

defendant and the family concern J.M. Industries. The relevant para 6 of the affidavit of the defendant states as follows:-

"6. It is submitted that the family of the defendant was running their business in the name and style M/s. J.M. Industries and the plaintiff showcasing himself to be a financer/broker and also being a part of the same business community had entered into some business transaction in the alleged years but it is pertinent to mention that whatever transactions were held in the alleged period between the plaintiff and the family business concern of the defendant were duly paid back by the defendant and their family concern J.M. Industries, the said transactions were paid back through cheques duly detailed in the Statement of account of the defendant placed for kind perusal of this Hon'ble Court."

10. The defendant is clearly taking contradictory stands. On the one hand he submits that the promissory notes have not been signed by the defendant and the same are fabricated. On the other hand he submits that whatever transaction took place was between the plaintiff and the family business concern of the defendant and all the dues of the defendant have been paid back. It is stated that payment back was done through cheques. However no details of the cheques have been placed on record. Hence the contention of f the defendant regarding execution of the promissory notes cannot be accepted.

11. The other contention of the defendant that the suit is barred under the

Punjab Registration of Money Lenders Act, 1938 is misconceived. It was held by the Division Bench of this Court in the case of Kampa Wati Devi v. Basant Rai and Anr. 4(1967) DLT 395 that for the bar under the said Act to apply, the plaintiff has to be a money lender namely a person who is in the business of money lending. An occasional loan to relation, friend etc. would not make a party a professional money lender. For a person to be in the business of money lending, there has to be an element of continuity and habit. Clearly, there is nothing to show here that the plaintiff is in the business of money lending. Bar under the Punjab Registration of Money Lenders Act, 1938 would have no application to the facts of the present case.

12. There is however prima facie merit in the last contention of the defendant that the claim of the plaintiff is barred by limitation. It is a matter of fact that the last transaction/promissory note between the parties as stated by the plaintiff in the plaint is of 15.03.2004. Thereafter, the plaint states that the defendant has been making the payments and last payment was made on 22.09.2009. No details are provided as to when payments have been made by the defendant prior to 2009. Nothing has been averred as to when the payments fell due. The promissory note is a demand promissory note. It is not stated when the default in payment has occurred by the defendant.

13. Reference may be had to Section 19 of the Limitation Act which provides that where payment on account of a debt is made before the expiration of the period prescribed by the person liable to pay the debt, a fresh period of limitation shall be computed from the time when the

payment was made. Reference may also be had to a judgment in the case of Subhash Chander Kathuria v. Umed Shingh and Anr. AIR 2006 Delhi 194 where in para 24, it was held as under:

"24. Admittedly, the limitation had expired on 26 th October, 1991. Fresh period of limitation, therefore, cannot start from making this payment of Rs.20,000/-. That is the effect of Section 18 of the Act as per which part payment has to be made within the period of limitation. Here, the payment was made much after the period of limitation. Issue No.1 is accordingly decided against the plaintiff and in favour of the defendant holding that the suit filed by the plaintiff is time barred."

14. In the present case, the last payment is stated to have been made on 22.09.2009. By that time the limitation for filing of suit had already expired. On a question posed by this Court to learned counsel for the plaintiff, he was not able to state as to how the issue of limitation would be met by the plaintiff. Section 19 of the Limitation Act clearly provides that a fresh period of limitation shall be computed from the time when the payment is made provided the payment is made before the expiration of the prescribed period. Prima facie, the suit appears to be barred by limitation.

15. As the defendant has made out a strong plausible case, he would be entitled to unconditional leave to defend. Needless to add that whatever observations are made herein are only for the purpose of the disposal of the present application. The parties would be free to raise all contentions at the time of final adjudication of the present suit.

16. The present application is allowed and the defendant is granted

unconditional leave to defend the present suit.

CS(OS) 668/2010 List before the Joint Registrar on 12.11.2013.

JAYANT NATH, J SEPTEMBER 12, 2013 rb